1. No category

A report from The Economist Intelligence Unit
PRIVATE SECTOR DEVELOPMENT
IN THE CARIBBEAN:
A REGIONAL OVERVIEW
Commissioned by
In partnership with
1
Contents
Executive summary
I. The Caribbean private sector in the regional
macroeconomic environment
6
12
15
Regional macroeconomic environment
Institutional effectiveness
Profile of the private sector
II. Key challenges for private sector development
17
19
20
22
24
26
27
Energy costs
Infrastructure and logistics
Access to finance
Human capital
Innovation and competition conditions
Gender
Environment
III. Large and emerging sectors
28
29
29
30
31
Business-process outsourcing and business services
Tourism
Higher education
Agriculture and food processing
Energy and mining
IV. Priority areas and action plans
33
34
34
36
37
© The Economist Intelligence Unit Limited 2015
Dialogue between the public and private sectors and prioritization of issues
Public-private partnerships
Policy tools to stimulate private-sector development
Talent for the 21st century
Conclusion
Editorial closing date: 20 December 2014
2
Preface
This report explores private sector development in the Caribbean region. The
report is largely based on the analysis in the Private Sector Assessment Reports
(PSARs) on 14 Caribbean countries. The PSARs were commissioned by
Compete Caribbean, a private sector development, technical assistance program
funded by the Inter-American Development Bank, Canada’s Department of
Foreign Affairs, Trade Development (DFATD), and the United Kingdom’s
Department for International Development. Compete Caribbean projects in the
Organization of Eastern Caribbean States (OECS) countries are implemented in
partnership with the Caribbean Development Bank. The Economist Intelligence
Unit combined its own proprietary analysis and forecasting data with analysis
from the PSARs to produce this comprehensive summary report. The PSARs
explain the current situation of each of the Caribbean countries and present an
overall assessment of private-sector development and recommendations for
facilitating and accelerating private investment and growth. This report provides
a summary of the key private-sector development issues noted in the PSARs,
and approaches to overcoming these challenges.
The PSARs draw on both primary and secondary data sources. Primary data
analyses were derived from interviews with key stakeholders from the
domestic private and public sectors as well as from interviews with regional
and international agencies. Secondary data were utilized to describe the state of
each country at both the micro and macro level. In addition to these specific
elements of the research, the development of the PSARs was assisted by
consultations organized under the Caribbean Growth Forum (CGF). The
original PSARs were formatted and edited by The Economist Intelligence Unit at
the request of the Compete Caribbean Program, but were not authored by The
Economist Intelligence Unit.
© The Economist Intelligence Unit Limited 2015
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Executive summary
Reforms to stimulate sustainable growth led by the private sector are more
important than ever. Although the details vary from country to country,
structural reform is needed in most Caribbean countries. Economic
diversification is essential for tourism dependent economies. Too many
countries are also excessively dependent on imported energy and/or
suboptimal solutions for power generation. Another issue is that in many
Caribbean economies employment is dominated by the public sector—and at a
time when governments' finances are under strain.
Solutions will need to come largely from, or in collaboration with, privatesector actors. Long-standing challenges will need to be overcome if the
Caribbean countries are to make the transition to a position from which
sustainable and inclusive growth is possible. Fortunately, as we explain below,
the challenges are surmountable.
For the Caribbean countries as a group, 2015 will be a significantly more
difficult year than the previous three, reflecting the still-challenging economic
climate. The need for private-sector-oriented solutions to these nations' longstanding challenges has never been greater. Some of the key challenges and
opportunities identified in the PSARs are:
Challenges:
 Strained public finances
 Cost of energy
 Access to finance
 Human capital, in particular inefficient labor markets and emigration of
skilled labor
 Innovation capacity
Opportunities:
 Engagement of diasporas
 Key measures to improve business environment
 Improve education systems
 Improve firm productivity
 Regional approach to climate change
2015: long-standing problems,
and some new developments
2015 will be a difficult year for both policymakers and entrepreneurs in the
Caribbean. The IMF estimates that the tourism-based economies1 that make up
most of the countries profiled in this report grew by only 1.1% in 2014 and will
expand by 1.7% in 2015. These countries are still being held back by numerous
1 Antigua and Barbuda, the Bahamas, Barbados, Belize, Dominica, Dominican Republic, Grenada, Guyana, Haiti,
Jamaica, St. Lucia, St. Kitts and Nevis, and St. Vincent and the Grenadines.
© The Economist Intelligence Unit Limited 2015
4
structural challenges that have constrained their economic performance in
recent years.
One of those challenges includes the legacy of inflexible fiscal policies, which
left governments little room to manoeuvre when the global financial crisis
struck. Public debt exceeds 90% of annual GDP on average in the Caribbean’s
tourism-based economies. Their global competitiveness as tourism destinations
has been eroded over the years. In 2001 foreign visitors spent around 75% more
per capita in the Caribbean than in broadly comparable destinations in the
Pacific. By 2010, that advantage had disappeared. Meanwhile, in most
Caribbean countries, employment is provided mainly by the public sector,
whose unionized workers are often unwilling to support necessary changes
that policymakers propose.
2015 will see two additional challenges. One is an acceleration in the
normalization of relations between the US and Cuba. This could result in
substantial investment in Cuba’s tourism industry, with the result that the
country becomes an even greater source of competition for the Caribbean's
other tourism-based economies.
The other new factor is the possibility that economic and political
developments in Venezuela could result in a substantial reduction in, or the
total ending of, the benefits that are currently made available through the
PetroCaribe mechanism. The main advantage of PetroCaribe has been that up
to 50% of oil purchases can be converted into 25-year loans carrying interest
rates as low as 1%. Without this arrangement, the oil-importing Caribbean
countries would have to pay for all oil purchases at world prices. This would
likely be a difficult adjustment, even though global oil prices have fallen
sharply since mid-2014.
The Caribbean: not an easy
place in which to do business
By and large, the Caribbean countries are not particularly easy places in which
to do business. Although the ease of doing business, as measured by the World
Bank’s Doing Business rankings, has improved significantly in a handful of
countries from 2014 to 2015 (with Jamaica and Trinidad and Tobago posting
significant improvements in the rankings), of the 15 Caribbean countries
considered in the Bank's latest rankings, only four—Antigua and Barbuda (89th),
the Dominican Republic (84th), Jamaica (58th), and Trinidad and Tobago (79th)—
are placed among the top 50% of all countries covered globally (189 economies).
The business environments in Suriname and Haiti are among the most difficult
in the world.
The challenges to doing business in Caribbean countries arise from a number
of factors. All of the Caribbean's economies are relatively small2. The
CARICOM Single Market and Economy3 (CSME) has not resulted in regional
links that might create economies of scale. Other than in Trinidad and Tobago,
2 Measured by Gross National Income per capita, which stood at US$8,913 in Caribbean states (excluding
Barbados, for which data was not available), compared with a global average of US$10,679 in 2013. By this
measure four countries, Antigua and Barbuda, the Bahamas, St. Kitts and Nevis and Trinidad and Tobago, have
GNI per capita above the global average, but all are well below the OECD average of US$38,904.
3 The CSME is an integrated development strategy with the aim of deepening economic integration and
strengthening trading links among non-traditional trading partners.
© The Economist Intelligence Unit Limited 2015
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high electricity prices and/or unreliability of power supply are reasons for
concern. In Guyana and the Dominican Republic, for instance, about 30% of
firms obtain electricity from their own generators.
Meanwhile, nearly 60% of firms in the region cite access to finance as a
moderate to severe obstacle to doing business. Furthermore, labor markets are
inefficient, with over- or underemployment being common. Collectively, the
Caribbean countries perform better than the world average in terms of
secondary-school enrolment (at 79%, compared with 73% globally), but they
perform less well in tertiary-education enrolment (at 27%, compared with a
world average of 32%). Emigration of skilled workers is a particularly acute issue
for Trinidad and Tobago, Suriname, Jamaica, Haiti and the Dominican Republic.
So, what can be
done?
Fortunately, there is much that can be done by governments to promote
sustainable growth in the region. Governments and private-sector enterprises
can work together to establish public-private partnerships (PPPs) on a regional
basis. The intelligent engagement of the Caribbean countries' substantial
diasporas, along with a variety of private- and public-sector actors within each
of the various countries, has the potential to promote innovation. The diasporas
are important owing to the fact that, since the 1990s, remittances to the region
have exceeded inward foreign direct investment and official development aid.
As of early 2015, remittances appear to have held up fairly well.
Further, as the governments of Trinidad and Tobago and Jamaica have shown
over the past year or so, specific measures can have a meaningful and positive
impact on the overall business environment. That the region is home to
internationally competitive educational institutions means that beneficial
educational reforms are possible.
Improved education systems and outcomes are just part of the policy packages
that have the potential to boost the competitiveness of Caribbean countries.
Other elements include tax reforms that encourage investment in the most
productive economic sectors, and regional initiatives to boost innovation.
Greater efforts need to be made to boost female employment in formal-sector
firms in industries other than education and restaurants/hotels, in which
women are already fairly well represented. Renewed efforts at the regional level
to deal with climate change and environmental problems could also be useful.
Progress in these areas should produce measurable benefits. If achieved, some
of these outcomes will be specific to particular countries—increased links
between Suriname's mining sector and the rest of that economy is one such
example. Other sectors in which the Caribbean countries are well placed to
compete include business-process outsourcing, medical and other higher
education, agriculture and food processing, sustainable power generation and
ecotourism. Achieving such benefits may take time. Positive action is therefore
needed more than ever before.
© The Economist Intelligence Unit Limited 2015
6
I. The Caribbean private sector in the regional
macroeconomic environment
As Caribbean economies have sought to recover and diversify following the
global financial crisis, private-sector development has taken on new importance
in the region. There is broad recognition that enabling and strengthening the
private sector is the most effective way of ensuring continued economic growth
in the region. Structural reforms are also needed in most Caribbean countries to
promote economic diversification. Moreover, many countries are overly
dependent on imported energy and/or suboptimal solutions for power
generation. Solutions will need to come largely from, or in collaboration with,
private-sector actors. Long-standing challenges will have to be overcome if
Caribbean countries are to make the transition to a position from which
sustainable and inclusive growth is possible.
For the purposes of this report, the Caribbean region includes 14 countries4
This group of countries is broadly divisible into two groups: those economies
that are largely dependent on tourism5, and those that are dependent on the
mining and minerals and agricultural commodities sectors6. The economies in
the latter group produce various commodities, most notably gold, aluminum
ore, petroleum products, sugar, bananas and rice7.
Regional macroeconomic
environment
Like many countries around the world, Caribbean economies suffered during
the global recession that began in 2008, with the majority experiencing at least
one year of negative growth. With recovery now under way, Caribbean
economies are growing again, although the tourism-based economies are
expanding more slowly than the commodity-based ones. The fall in global oil
prices from late 2014 has affected net oil exporters, such as Trinidad and
Tobago, which has announced a projected public revenue shortfall for fiscal
year 2014/15 (October-September). Meanwhile, net oil importers, like the
Dominican Republic and Jamaica, have enjoyed a dip in inflation as a result of
falling oil prices.
4 Antigua and Barbuda, the Bahamas, Barbados, Belize, Dominica, Grenada, Guyana, Haiti, Jamaica, St. Lucia,
St. Kitts and Nevis, and St. Vincent and the Grenadines, Suriname, and Trinidad and Tobago.
5 Antigua and Barbuda, the Bahamas, Barbados, Dominica, Dominican Republic, Grenada, Jamaica, St. Lucia, St.
Kitts and Nevis, and St. Vincent and the Grenadines.
6 Belize, Guyana, Suriname, and Trinidad and Tobago.
7 MIT, Observatory of Economic Complexity 2014.
© The Economist Intelligence Unit Limited 2015
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Figure 1
Persistent economic diversification shortcomings and difficult policy
environments have prevented a strong recovery in Caribbean economies. The
IMF estimates that for this group GDP grew by an average of just 1.1% in 2014
and will expand by 1.7% in 2015—an increase compared with near-zero real GDP
growth in 2011 and 2012 and -4% in 2009, at the lowest point of the recession,
but still short of the pre-recession rate of nearly 4% in 20078. This compares
with GDP growth estimates of 2.1% in 2014 and 2.5% in 2015 for small Pacific
island countries, according to the IMF9. However, a pick-up in the economic
performance of key tourism source markets, such as the US and the UK, will
help to boost arrival numbers, thus lifting revenue in 2015. In JanuaryNovember 2014, travel to the Caribbean by US residents was up by 9.6%
compared with the year-earlier period10 while travel to the Caribbean by UK
residents increased by 4.1% during the first three quarters of 2014 compared
with the year-earlier period11.
8 IMF, 2014a. “Latin America and the Caribbean: Coping with Challenging Times”,
http://www.imf.org/external/pubs/ft/reo/2014/whd/eng/pdf/wreo1014.pdf
9 IMF, 2014b. Asia & Pacific Small States Monitor. http://www.imf.org/external/np/apd/ssm/2014/0814.pdf
10 International Trade Administration, 2015. “U.S. Citizen Traffic to Overseas Regions, Canada & Mexico 2014”,
http://travel.trade.gov/view/m-2014-O-001/index.html
11 Office for National Statistics, 2015. “Overseas Travel and Tourism—Quarterly Release—Q3 2014”.
http://ons.gov.uk/ons/publications/re-reference-tables.html?edition=tcm%3A77-318981
© The Economist Intelligence Unit Limited 2015
8
Figure 2
Figure 3
Rates of economic growth in the Caribbean's commodity-exporting economies
are forecast to be roughly double those in its tourism-dependent economies in
the short term: the IMF estimates GDP growth in commodity-exporting
countries at 2.7% on average in 2014 and forecasts growth at 3% in 2015.
However, shifts in global prices for key commodities pose significant risks to
this forecast. Lower commodity prices have already resulted in downward
revisions to growth projections, while the lacklustre performance of noncommodity sectors in these countries remains an obstacle to higher overall
growth rates.
© The Economist Intelligence Unit Limited 2015
9
Figure 4
The regional average rate of inflation has fallen since 2011 and is not expected
to exceed 3.5% on average in 201512. Inflation figures vary significantly across the
region, with most countries posting low rates, while a handful of others buck
that trend with volatile prices and high inflation in recent years (see Figure 4).
Average inflation in the region stood at 2.4% in 2013, boosted by relatively rapid
rates of increase in prices in Jamaica (9.4%), Haiti (5.9%) and Trinidad and
Tobago (5.2%). Inflation estimates for 2014 show an uptick in the region, to 3.1%.
Again, the average rate is boosted by countries that are experiencing relatively
high inflation, most notably Jamaica, St. Vincent and the Grenadines, and
Trinidad and Tobago.
Caribbean economies generally exhibit weaker macroeconomic fundamentals
than other small economies globally,13 performing less well on indicators
including government fiscal balance and public debt14. Researchers have
pointed to generally challenging macroeconomic environments, particularly a
high level of government debt as a percentage of GDP, as key factors explaining
the Caribbean’s relatively low GDP growth rates.15
12 IMF, 2014a.
13 Ruprah, I. et al., 2014. Is there a Caribbean sclerosis?: stagnating economic growth in the Caribbean. Inter-
American Development Bank.
http://publications.iadb.org/bitstream/handle/11319/6450/Is%20There%20A%20Caribbean%20Sclerosis_%2
03-13-14%20web.pdf?sequence=1
Ruprah et al. include in this group around 50 countries with populations under 3m.
14 Ruprah et al.
15 Ibid.
© The Economist Intelligence Unit Limited 2015
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Figure 5
Prior to 2008, Caribbean governments were not sufficiently prepared to cope
with economic shocks, given the limited nature of their fiscal buffers, which
reflected relatively high public debt and large fiscal deficits. This amplified the
effects of the global crisis on the region's economies. Public debt increased
markedly, especially when compared with the debt levels of small economies
in other world regions16. Research indicates that Caribbean economies with
debt-to-GDP ratios above 56% suffer reduced economic growth, owing to the
fact that domestic and foreign investors refrain from making investments
because of their expectation of lower returns and the possibility of higher taxes
being imposed17. In Barbados, public debt as a proportion of GDP has
continued to increase since 2012, from 84% in that year to 103% in 2014. In
Jamaica this measure has remained above 130% since 2009. Guyana’s ratio has
dropped from a recent high of 65% in 2010 to 54% in 2014 (see Table 1).
Table 1: Public debt (% of GDP)
Bahamas
Barbados
Belize
Dominican Republic
Guyana
Jamaica
Trinidad and Tobago
2007
n/a
51.0
88.5
31.5
59.9
109.6
28.5
2008
n/a
52.7
82.5
32.3
61.6
118.0
34.5
2009
n/a
63.0
88.2
35.7
64.8
131.9
54.4
2010
43.3
71.8
85.5
36.1
65.2
133.5
52.7
2011
45.1
78.0
81.4
37.2
65.2
131.8
46.9
2012
48.8
83.9
76.9
41.0
62.6
133.9
55.9
2013
56.1
96.4
82.1
45.6
56.9
132.5
52.7
2014
n/a
102.8
78.9
45.0
53.7
131.0
50.6
Source: The Economist Intelligence Unit.
In 2012 the average debt-to-GDP ratio of Caribbean economies was 1.7 times the
global average for small economies. Although some countries, such as Jamaica,
St. Kitts and Nevis, and Guyana have worked with the IMF to control their
fiscal risks, vulnerabilities have increased elsewhere in the region. Public debt
in tourism-dependent economies already exceeds 90% of GDP on average,
while the financing needs of these countries' governments continues to
increase. The conundrum of slow growth combined with high debt continues
16 Ruprah et al.
17 Greenidge, K. et al., 2012. Threshold Effects of Sovereign Debt: Evidence from the Caribbean, IMF.
https://www.imf.org/external/pubs/ft/wp/2012/wp12157.pdf
© The Economist Intelligence Unit Limited 2015
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to threaten economies in the region18. In tourism-based economies,
governments’ ability to access international financial markets has diminished
while current-account deficits have widened. A particular fiscal risk is posed by
the dependence of many Caribbean economies (including the Dominican
Republic, Jamaica, Antigua and Barbuda, Belize, Dominica, Grenada, Guyana,
Haiti, St. Kitts and Nevis, St. Vincent and the Grenadines, and Suriname) on
PetroCaribe19 for subsidized fuel: the removal of this subsidy would increase
energy prices and worsen these countries’ current-account positions. The
Caribbean's commodity-based economies need to improve the quality of
government spending in terms of its impact on social indicators, and to
enhance their revenue management in order to ensure that they remain
financially stable in the medium term.20
Many Caribbean economies also face risks to their financial sectors, which
could add to the difficulties that private-sector firms already face in accessing
finance. The IMF has recommended that governments reform the financial
sector through regional projects to reduce systemic risks such as high levels of
non-performing loans and excessive market concentration in the financial
sector21. The Fund’s Caribbean Regional Financial Project is gathering data on
exposure and the interconnectedness of institutions, and will subsequently
focus on the prevention and management of financial crises22. Cleaning up
banks’ balance sheets and dealing with unstable institutions is also essential to
ensuring sufficient financial stability to support continued economic recovery.
A high level of remittance inflows is one positive by-product of the large-scale
outward migration from Caribbean countries that continues to occur.
Remittances make up the biggest source of external funding for the region's
economies, having been higher than foreign direct investment and also higher
than official development aid since the 1990s23. Such inflows have thus played
a significant role in reducing poverty and in promoting business development
by providing an alternative source of investment capital. Entrepreneurs are
taking advantage of economic links that exist in the diaspora economy to create
growth opportunities in their home countries. The diaspora economy includes
telecommunications, tourism, transportation, and trade in nostalgic, ethnic and
niche goods24.
18 Ibid.
19 Under the PetroCaribe initiative, up to 50% of the cost of oil purchases can be converted into 25-year loans
from Venezuela carrying annual interest rates as low as 1%.
20 IMF, 2014a.
21 Canetti, E., 2014. “Financial Interconnectedness in the Caribbean”. IMF.
http://www.imf.org/external/np/seminars/eng/2014/caribbean/pdf/s3p2-Canetti.pdf
22 Ibid.
23 Dawson, L. R., (2007). Brain Drain, Brain Circulation, Remittances and Development: Prospects for the
Caribbean. Caribbean Paper No. 2, June 2007. Centre for International Governance Innovation (CIGI), Ontario.
https://www.cigionline.org/sites/default/files/2.%20Brain%20Drain,%20Brain%20Circulation,%20Remittanc
es%20and%20Development-%20Prospects%20for%20the%20Caribbean.pdf
24 UWI Consulting, 2014. Caribbean Diasporic Entrepreneurship Preliminary Analytical Report. Compete
Caribbean. http://competecaribbean.org/resources/private-sector-development/caribbean-diasporicentrepreneurship-analytical-report/?preview=true&preview_id=2942&preview_nonce=78ef5ce3bf
© The Economist Intelligence Unit Limited 2015
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Institutional effectiveness
As entrepreneurs in the Caribbean private sector seek to create opportunities,
they frequently face regulatory and bureaucratic hurdles in connection with
government institutions. According to the Global Competitiveness Report,
produced by the World Economic Forum (WEF), countries in the region
typically score poorly relative to other small economies, and the rest of the
world generally, in terms of their public institutions (see Figure 6)25. Poor
institutional performance negatively affects overall competitiveness: in the
WEF's report for 2014-15, six of the seven Caribbean countries included were
ranked in the bottom 50% of the 144 economies covered by the study, and only
Barbados, at 55th, was placed in the upper half of the world rankings.
Figure 6
Reforms to improve institutional performance have been widely discussed, but
research indicates that there is resistance to such changes in Caribbean
economies, driven by rent-seeking on the part of entrenched interests26.
Globally, small economies tend to have proportionally larger public sectors, and
the situation is no different in the Caribbean. The public sector in the region is
large in terms of employment, and the political power of public-sector workers
has enabled them to erect barriers to reforms that might adversely affect them.
In some cases, special interest groups have created obstacles to reform within
institutions, thus impairing these organizations' performance27.
25 Nurse, K., 2014. Human Imagination, Innovation and Competitiveness in the Caribbean. IDB.
http://competecaribbean.org/resources/private-sector-development/human-imagination-innovationcompetitiveness-caribbean
26 Persaud, A. D., 2011. Fostering Growth and Development in Small States through Disruptive Change: A Case
Study of the Caribbean, Caribbean Paper No. 11, April 2011. CIGI, Waterloo.
https://www.cigionline.org/sites/default/files/no.11.pdf
27 Ruprah et al.
© The Economist Intelligence Unit Limited 2015
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Figure 7
The World Bank’s Doing Business rankings for 2015 (see Figure 7) shows how
these issues of institutional performance affect businesses' operations,
quantifying how well Caribbean economies facilitate business activities.
Overall, the region's economies lag behind the top performers globally on key
measures of efficiency. Of the 15 Caribbean countries included in the most
recent rankings, only four—Antigua and Barbuda, the Dominican Republic,
Jamaica, and Trinidad and Tobago—are placed in the top 50% of countries
worldwide. In addition, only Jamaica, Trinidad and Tobago and Barbados have
seen their rankings improve by more than one place in the past year, while the
rankings of the vast majority of Caribbean countries have fallen. Antigua and
Barbuda has slipped six places in the overall rankings, while St. Lucia has
dropped five places. The Caribbean's poorest performers, Suriname and Haiti,
are among the most difficult locations globally in which to do business. The
business environment in Jamaica has recently improved dramatically. In the
World Bank's 2015 Doing Business report, Jamaica's overall ranking improved to
58th out of 189 countries, from 85th in 2014. Regional institutions have
supported crucial reforms in the country via technical assistance to improve
access to finance, facilitate public-private partnerships and enhance the
efficiency of tax administration28.
28 Compete Caribbean, 2014. "Compete Caribbean contributes to Jamaica’s 27-place jump in World Bank
rankings". http://competecaribbean.org/news/compete-caribbean-contributes-to-jamaicas-27-place-jumpin-world-bank-rankings
© The Economist Intelligence Unit Limited 2015
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Figure 8
Data from a 2014 firm-level survey funded by Compete Caribbean highlight a
number of areas in which Caribbean institutions outperform world and
regional averages, and others where efforts are required to improve institutional
performance. On average senior management spent just over 5% of their time
per week dealing with requirements of government regulation in the
Caribbean, while the global average was nearly 10% (see Figure 8)29 and the
average for all of Latin America and the Caribbean was 14%. In no Caribbean
country was the proportion above 10%, suggesting that the region's institutions
perform relatively well in this area. Moreover, in all but three of the countries
surveyed—Belize, Guyana and St. Lucia—the majority of respondents indicated
that customs and trade regulations were either no obstacle at all, or a minor
obstacle to doing business.
Figure 9
29 Data for averages was taken from the latest World Bank Enterprise Surveys,
http://www.enterprisesurveys.org/. 2014 updates on firm level data can be found on the Compete Caribbean
website, http://competecaribbean.org/category/micro-level-data/
© The Economist Intelligence Unit Limited 2015
15
Profile of the private sector
The services sector dominates the majority of Caribbean economies, and is
also the biggest employer30. Services are the largest contributor to economic
growth in the region: value added of the services sector accounts for more than
50% of GDP in the 15 economies covered by this research, with the exception of
commodity-dependent Guyana and Trinidad and Tobago. Tourism and business
services are two of the most important components of the sector. The tourism
and travel industry, in particular, contributes significant proportions of GDP in
many Caribbean economies, ranging from 22% in Grenada to 75% in Antigua
and Barbuda, with the Bahamas, Barbados and St. Lucia all depending on
tourism for nearly 50% of their economic activity31. However, Caribbean
economies have seen their US dollar receipts per tourist decline relative to other
world regions. In 2001 tourists visiting the Caribbean spent 75% more than
visitors to the Pacific islands, but by 2010 this advantage had virtually
disappeared. Tourism-based economies in the Pacific have grown faster, in part
because the Pacific islands’ customer base is fairly diverse, whereas the
Caribbean depends for the vast majority of arrivals on the US, Canada and
Europe—economies that were severely affected by the economic slowdown that
took place from 200832.
The mining and energy sector is the second-largest contributor to economic
activity in the region. Guyana, Suriname, and Trinidad and Tobago rely heavily
on commodity export revenue. In Guyana, such income is derived largely from
gold mining. Suriname exports both gold and aluminum oxide, while Trinidad
and Tobago exports oil and gas.
The Caribbean private sector consists largely of small- and medium-sized
enterprises (SMEs). Such companies are mostly locally owned, conduct their
business in small- and medium-sized towns and lack strong links to the
international economy. As a result of these factors, sales and employment
growth at many of these firms lag behind those of their peers in other small
economies. Such businesses tend to be concentrated in the tourism and retail
sectors, and nearly 75% are classified as small, compared with 66% in small
economies globally33.
The 15 countries covered by this research have moved towards regional
integration. With the exception of the Dominican Republic, all are members of
the Caribbean Community (CARICOM), which promotes regional economic
integration. The majority also have membership of the CARICOM Single
Market and Economy (CSME). Once implemented, the CSME will provide for
the free movement of goods, services, capital and labor, while member
countries also will share a common trade policy. However, integration has not
30 Rabellotti et al., 2014. “Clusters in the Caribbean: Understanding their Characteristics, Defining Policies for
their Development”. Compete Caribbean. http://competecaribbean.org/resources/private-sectordevelopment/clusters-caribbean-understanding-characteristics-defining-policiesdevelopment/?preview=true&preview_id=2945&preview_nonce=fe5585839c
31 Ruprah et al.
32 Ibid.
33 World Bank Enterprise Surveys, cited in Ruprah et al.
© The Economist Intelligence Unit Limited 2015
16
occurred as quickly as expected. Only a few inter-country industrial clusters
exist in the Caribbean region, reflecting poor cooperation and the weakness of
economic links between nations34. Integration initiatives have not led to a
marked increase in intraregional non-oil trade, which has not expanded greatly
since the 1970s35.
Table 2: Top export destinations
Country
Antigua & Barbuda
Bahamas
Barbados
Belize
Dominica
Dominican Republic
Grenada
Guyana
Haiti
Jamaica
St. Kitts & Nevis
St. Lucia
St. Vincent & the Grenadines
Suriname
Trinidad & Tobago
1st
Nigeria (66%)
Singapore (30%)
Nigeria (37%)
US (33%)
Jamaica (13%)
US (51%)
US (18%)
US (31%)
US (84%)
US (47%)
US (47%)
UK (24%)
St. Lucia (14%)
US (27%)
US (26%)
2nd
Poland (15%)
US (22%)
US (15%)
UK (20%)
Trinidad & Tobago (9%)
Haiti (11%)
Switzerland (15%)
Canada (26%)
Canada (3%)
Canada (6.0%)
Germany (8.0%)
France (21%)
Turkey (11%)
Belgium-Lux (20%)
Argentina (15%)
3rd
Cameroon (4%)
Poland (10%)
Trinidad & Tobago (7%)
Netherlands (5%)
St. Kitts and Nevis (7%)
China (5%)
Germany (11%)
Venezuela (9%)
Vietnam (2%)
Russia (4%)
Canada (6%)
Barbados (12%)
Poland (10%)
Canada (10%)
Chile (11%)
4th
South Korea (2%)
Ecuador (6%)
Jamaica (3%)
Japan (4%)
Sweden (6%)
Canada (2%)
Netherlands (9%)
UK (7%)
Mexico (2%)
UAE (4%)
Turkey (5%)
Guyana (9%)
Trinidad & Tobago (8%)
Barbados (10%)
Spain (7%)
Source: MIT Observatory of Economic Complexity. Data is from the latest year available, typically 2012.
In part, integration efforts such as CARICOM seek to overcome the challenges
faced by small markets. Achieving economies of scale is difficult in Caribbean
countries, owing to the limited size of their home markets and the consequent
low level of domestic demand. In the Caribbean, this has been a perennial
problem for the agricultural sector. Traditional exports, such as bananas and
sugar, largely ceased to be economically viable when the region lost preferential
access to European markets in the mid-1990s (although there has been renewed
interest in recent years in a number of niche agricultural products)36.
Promoting clusters and the networks associated with them is one way to link
firms into a wider ecosystem37. Guyana and Belize have enjoyed success
creating coordination mechanisms in their tourism and aquaculture industries.
In both countries’ aquaculture clusters, the establishment of industry
associations has enabled the successful implementation of environmental
standards, increased the availability of technical assistance, and facilitated
policy dialogues between industry and government38. Governments can
increase coordination capacity and can target policies at specific sectors and
value chains39.
34 Rabellotti et al.
35 Ruprah et al.
36 Rabellotti et al.
37 Ibid.
38 Ibid.
39 Nurse.
© The Economist Intelligence Unit Limited 2015
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II. Key challenges for private sector development
This section provides a summary of the key private-sector development
challenges noted in the abbreviated PSARs. Although they are organized by
category, these challenges are interrelated. For example, increasing innovation
requires improvements to human capital, and increasing export
competitiveness depends in part on upgrades to infrastructure.
Energy costs
The high cost of energy and the unreliability of electricity supplies together
constitute one of the principal challenges impeding private-sector development
in the Caribbean. High costs reflect both the logistics of providing energy to
island nations, and also the limitations in terms of economies of scale owing to
the small size of many Caribbean countries. The region’s highest electricity
tariffs are on small islands (43 US cents/kWh in Antigua and Barbuda, for
example), while the lowest are in Suriname (5 US cents/kWh) and Trinidad and
Tobago, a major energy producer (6 US cents/kWh). According to the InterAmerican Development Bank (IDB), in 2012 retail electricity prices in the
Caribbean averaged 33 US cents/kWh (see Table 3)40. By way of comparison, US
electricity prices averaged 12 US cents/kWh in late 201441, and EU electricity
prices averaged 20 US cents/kWh in the middle of that year42. The region’s high
per-capita energy costs are a contributory factor behind the fiscal stresses that
many Caribbean economies are facing.43,44
40 Barton, C. et al., 2013. “The Caribbean has some of the world’s highest energy costs—now is the time to transform
the region’s energy market”. IDB. http://blogs.iadb.org/caribbean-dev-trends/2013/11/14/the-caribbean-has-someof-the-worlds-highest-energy-costs-now-is-the-time-to-transform-the-regions-energy-market/
41 Data is an average of residential, commercial, industrial, and transportation. US Energy Information Administration,
2015. Electric Power Monthly. http://www.eia.gov/electricity/monthly/epm_table_grapher.cfm?t=epmt_5_6_a
42 EU data is an average of medium-size industries and medium-size households for 2014. EIU used the June 30, 2014
exchange rate to calculate US cents/kWh. Eurostat, 2014. “Electricity prices by type of user”.
http://ec.europa.eu/eurostat/tgm/refreshTableAction.do?tab=table&plugin=1&pcode=ten00117&language=en
43 Barton et al.
44 Oil prices fell significantly in 2014 and are forecast to remain low through the end of 2015. As of end-January 2015
The Economist Intelligence Unit forecasts that prices will rebound over the medium term, based on rising extraction
costs and other supply-side factors
© The Economist Intelligence Unit Limited 2015
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Table 3: Average retail tariffs per utility, 2012
Antigua and Barbuda
Bahamas
Barbados
Dominica
Dominican Republic
Grenada
Guyana
Jamaica
Haiti
St. Lucia
St. Vincent and the Grenadines
Suriname
Trinidad and Tobago
All-country average
$0.43
$0.26
$0.32
$0.43
$0.21
$0.40
$0.32
$0.36
$0.38
$0.38
$0.36
$0.05
$0.06
$0.33
Source: Inter-American Development Bank.
Notes: Data for Bahamas is for 2010. Data for Guyana, St. Vincent and the Grenadines,
Suriname and Trinidad and Tobago is for 2011.
Data from a 2014 firm-level survey45 funded by Compete Caribbean provide
information regarding the reliability of electricity supplies. In all countries in
the region, a large majority of the firms surveyed cite problems with power
supply as an obstacle to their business operations—only in Suriname is the
proportion below 70%. A far smaller proportion of enterprises report that
power problems are the biggest difficulty that they face; however, the
proportions are unusually high in Barbados (with 21% of companies saying that
electricity supply shortcomings are the main obstacle to their activities),
Jamaica (18.6%) and Guyana (15%). In Guyana, nearly 35% of power is sourced
from generators shared or owned outright by companies, while in Barbados the
figure is around 30%; in most other Caribbean countries, firms obtain a much
smaller proportion of their electricity from generators. Poor energy
infrastructure has a disproportionately harmful effect on small firms46. The
unreliability of the power grids in many Caribbean countries means that a
larger proportion of small firms own generators than in small economies
globally.
45 Compete Caribbean, http://competecaribbean.org/category/micro-level-data/
46 Ruprah et al.
© The Economist Intelligence Unit Limited 2015
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Figure 10
Tapping the Caribbean’s natural energy resources, such as solar, wind and
geothermal power, would help to address some of these problems. With
regulatory frameworks that facilitated private sector participation in the
renewable energy sector, the sector could attract private capital and promote
public-private partnerships47 Until Caribbean countries rebalance their energy
mix, the region will be vulnerable to oil price shocks, as well as to specific
threats such as the potential withdrawal of the supplies of cheap oil that they
currently obtain from Venezuela under the PetroCaribe arrangement.
Infrastructure and logistics
Caribbean economies need to improve their transportation infrastructure.
Inadequate transportation infrastructure imposes high costs on the private
sector, and small firms rely more heavily than large ones on public
infrastructure, and thus bear a greater burden in this area. According to a 2014
firm-level survey funded by Compete Caribbean, in all countries other than
Suriname a majority of firms identify transportation difficulties as a constraint
on their business activities. In Belize, fully 86% of companies say that
transportation problems are a hindrance to their operations, while in Trinidad
and Tobago the figure is 71% and in both Barbados and Jamaica it is 69%. In
Trinidad and Tobago, the volume of traffic has exceeded the capacity of the
road network, and congestion and related delays are common in and around
the country's principal cities.48
Limited connectivity also constrains cross-border trade, thus presenting a
challenge for private-sector firms looking to venture beyond their small home
markets. Infrastructure challenges in Antigua and Barbuda relate largely to intraregional travel and freight logistics. Firms in the country reported difficulties
related to business travel, which constrain investment owing to the fact that
they make site visits challenging. In addition, companies noted that in some
47 Ruprah et al.
48 Compete Caribbean, 2014. Private Sector Assessment of Trinidad and Tobago. IDB.
http://competecaribbean.org/wp-content/uploads/2014/12/2014-Trinidad-and-Tobago-Private-SectorAssessment-Report.pdf
© The Economist Intelligence Unit Limited 2015
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cases freight routes make it more viable to send intra-regional exports via
Miami in the US, instead of shipping them directly within the region49. The
Caribbean Growth Forum hosts a working group on logistics, which has
identified constraints relating to regional air and sea connections that constitute
hurdles to efficient intraregional logistics; these obstacles include high costs, and
the limited number of shippers and routes.
Access to finance
Facilitating small and medium-sized enterprises (SMEs)' activities and
development is key to a healthy private sector50. Access to finance is a principal
challenge faced by SMEs worldwide, but in most of the Caribbean the
challenge is particularly acute (see Table 4). Data from a 2014 firm-level survey
funded by Compete Caribbean show that difficulty in obtaining finance is a
leading impediment to doing business, with 30% of firms in the region
mentioning it as a moderate obstacle and 26% citing it as a major or severe
obstacle. The problem is greatest in Belize, where 58% of enterprises say that
difficulty accessing finance is a major or severe obstacle, while in Dominica the
proportion is also high, at 45% of firms. In Antigua and Barbuda, by contrast,
only 6% of companies report that obtaining finance is a major or severe
obstacle, while access to finance is also relatively easy in Trinidad and Tobago.
Table 4: Access to finance as an obstacle
(percentage of firms surveyed identifying obstacle)
No obstacle
All-country average
12%
Antigua and Barbuda
15%
Bahamas
7%
Barbados
27%
Belize
7%
Dominica
4%
Grenada
9%
Guyana
33%
Jamaica
19%
St. Kitts and Nevis
10%
St. Lucia
5%
St. Vincent and the Grenadines
5%
Suriname
32%
Trinidad and Tobago
4%
Source: 2014 firm-level survey funded by Compete Caribbean.
Minor obstacle
30%
41%
39%
22%
17%
33%
34%
13%
26%
40%
35%
34%
33%
31%
Moderate obstacle
30%
39%
28%
19%
18%
18%
33%
18%
25%
29%
44%
26%
11%
52%
Major obstacle
15%
2%
9%
23%
40%
17%
9%
21%
23%
5%
13%
14%
18%
10%
Severe obstacle
11%
4%
17%
10%
18%
28%
15%
14%
7%
17%
4%
21%
6%
4%
The survey also shows that only 16.5% of firms in the region use banks as a
source of investment funds (see Figure 11), and that only in Dominica is the
proportion above 20%. The proportion of enterprises using banks to obtain
working capital is far higher, at over 55%, with the highest proportions reported
in Barbados (at 87%) and Belize (83%); however, in the Bahamas, Guyana and
Suriname the proportion is well below the average regional level (see Figure 12).
49 Compete Caribbean, 2014. Private Sector Assessment of Antigua and Barbuda. IDB.
http://competecaribbean.org/wp-content/uploads/2014/10/EIU-Antigua-Barbuda-Final.pdf
50 Public Society for the Management of Tourist Innovation and Technologies (SEGITTUR) and Centre for
Cooperative Research into Tourism (CICtourGUNE), 2014. Improving Competitiveness in the Caribbean Tourism
Sector through ICT-based Innovations. http://competecaribbean.org/resources/private-sectordevelopment/improving-competitiveness-in-the-caribbean-tourism-sector-through-ict-basedinnovations/?preview=true&preview_id=3266&preview_nonce=9a3ee7aa7c
© The Economist Intelligence Unit Limited 2015
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Thus, the survey data indicate that numerous firms in the region do not use
banks to fund investment, while a substantial minority do not use such
institutions as a source of working capital.
Figure 11
Figure 12
© The Economist Intelligence Unit Limited 2015
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This is partly owing to the fact that credit bureaux do not exist in many
countries and interest rates tend to be high. It is also because banks in the
region require high levels of collateral. In most countries in the region it is well
over 100% and in Barbados, Belize and Jamaica it exceeds 170% (see Figure 13).
Figure 13
Figure 14
Human capital
There are two notable challenges in the area of human capital that affect
private-sector development in the Caribbean: first, firms' difficulties in finding
and hiring workers with the right skill sets for the jobs available, and second,
the struggle of highly educated workers to find appropriate employment.
Medium- and long-term human capital strategies must ensure that educational
outputs meet private sector needs. According to the World Bank, enrolment in
tertiary education is underperforming in most Caribbean countries compared
with the global average of 32%. Notably, for those countries with available data,
only Grenada and Barbados have tertiary enrolment rates above the average, at
52.8% and 60.8% respectively51. Indeed, in 2008 65% of heads of households had
51 Latest available data for Grenada is from 2009; Barbados data is from 2011. World Bank, World Development
Indicators.
© The Economist Intelligence Unit Limited 2015
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just primary education and only 19% had achieved secondary education52.
More can be done across the region to boost vocational and on-the-job training,
which may improve labor market mobility and flexibility. For example, in order
to address the mismatch in skills demanded by the economy and outputs from
the educational system, the IMF recommended that the Guyanese government
step up training opportunities, including vocational training in secondary
schools, skills training, and on-the-job training53.
The well-educated in the Caribbean sometimes struggle to find suitable
employment opportunities. A shortage of suitable employment opportunities
and relatively low wages leads many skilled workers to emigrate from the
region (see Table 5), depressing population levels and also, in the view of some
experts, resulting in monetary losses that outweigh the value of the funds
remitted home by emigrants54. In recent years the Caribbean region appears to
have experienced economic growth without the creation of additional jobs55.
Encouraging the formation of dynamic clusters is crucial in terms of generating
skilled jobs in innovative new enterprises that will keep talented workers in the
Caribbean56. Public-sector investment is vital to creating such clusters because it
can support collaboration and coordination that might not occur otherwise,
which then can lead to more sophisticated joint actions involving a number of
firms57. Beyond collaboration and coordination, many clusters require specific
public inputs, such as infrastructure, training in specific skills or sector-specific
regulatory changes.
Some researchers have pointed to the economic benefits that diaspora
economies and entrepreneurs can provide to their home countries. Compete
Caribbean has funded research and analysis in this area to determine how to
support diaspora entrepreneurs, in order to promote the "brain circulation" and
"brain gain" associated with the emigration and subsequent return of members
of the diaspora, as well as the investments that such people often make locally
after coming home58.
52 Compete Caribbean, 2014. Private Sector Assessment of Antigua and Barbuda. IDB.
http://competecaribbean.org/wp-content/uploads/2014/10/EIU-Antigua-Barbuda-Final.pdf
53 IMF, 2014c. Guyana 2013 Article IV Consultation.
http://www.imf.org/external/pubs/ft/scr/2014/cr14294.pdf
54 Mishra, P., 2006. Emigration and Brain Drain: Evidence from the Caribbean. IMF Working Paper
06/25. Washington, DC: IMF. https://www.imf.org/external/pubs/ft/wp/2006/wp0625.pdf
55 Ibid.
56 Rabellotti et al.
57 Ibid.
58 UWI Consulting.
© The Economist Intelligence Unit Limited 2015
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Table 5: Stock of Caribbean emigrants by country, 2010
Country
Bahamas
Barbados
Belize
Dominican Republic
Guyana
Haiti
Jamaica
Saint Lucia
Suriname
Trinidad and Tobago
No. of emigrants
1,000
18,000
6,000
1,070,000
374,000
994,000
803,000
22,000
4,000
301,000
% of population
0.90%
7.00%
1.90%
11.30%
49.20%
9.80%
29.40%
12.40%
0.70%
22.40%
Source: UN Economic Commission for Latin America and the Caribbean.
Innovation and competition
conditions
If Caribbean economies are to avoid remaining trapped in low-value-added
activities and the production of commodities, they will need to implement
innovation-driven plans for growth59. Productivity gains and competitiveness
are closely linked to innovation as economies move up to higher development
stages. The World Economic Forum noted in its Global Competitiveness Report
2013-2014 that “The traditional distinction between countries being “developed”
or “developing” will become less relevant and we will instead differentiate
among countries based on whether they are “innovation rich” or “innovation
poor.’” The Latin America and Caribbean region underperforms in terms of
productivity and innovation compared with other regions60. Weakness in the
area of innovation means that productivity is lower than potential, given that
innovative firms in Latin America and the Caribbean are more productive than
non-innovative ones61. As argued by many business leaders in the region, a few
large business groups dominate economic activity, thereby reducing the degree
of competition62. In an environment of weak competition, firms tend not to
invest in innovation sufficiently to drive increases in productivity63. One
possible solution to this problem is the introduction of more effective
competition policies. Overall, firms that export are more innovative64, but only
31% of Caribbean firms exported (directly or indirectly) in 2013, according to the
2014 firm-level survey funded by Compete Caribbean.
In this context, institutional support is necessary to drive innovation in the
private sector. Coordination between business, academia and government is
essential, but government funding for innovation policy is generally low in the
Caribbean, and thus most innovation and competitiveness strategies are funded
by international donors65. Ideally funding should come from the private sector,
59 Nurse.
60 Rabellotti et al.
61 Ibid.
62 Ruprah et al.
63 Ibid.
64 Rabellotti et al.
65 Nurse.
© The Economist Intelligence Unit Limited 2015
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which is more efficient in stimulating applicable innovation than public funded
research and development. The UN Educational, Scientific and Cultural
Organization (UNESCO) notes that agencies dedicated to science, technology
and innovation are lacking in Antigua and Barbuda, Belize, Dominica, Grenada,
St. Kitts and Nevis, St. Lucia and Suriname66. Given the small size of many
Caribbean economies, a regional innovation system could prove an effective
solution67. The IDB is funding a project to jump start a regional hub, the
Caribbean Regional Entrepreneurial Assets Commercialization Hub, to share
effective strategies for managing and monetizing intangible business assets for
Caribbean entrepreneurs, thereby helping firms to increase their market value,
market their products and find business partners68. Whatever the chosen
approach, such a system needs to promote cooperation between research
institutions and the business sector in order to increase the rate of return on
research investments and ensure innovations are applicable to industry.
Numerous sectors, including agriculture and tourism, would benefit from such
cooperation. The agricultural sector faces a technology gap in the Caribbean,
while tourism firms could benefit from advances in areas such as knowledge
management69.
Figure 15
A strategy to promote Internet connectivity and use in the region is an
important precondition of any innovation agenda given Internet is a key
infrastructure for the adoption of new technologies70. According to the World
Bank, 49% of the Caribbean population are Internet users (compared with 43%
globally and 81% in the OECD) and 11% have fixed broadband connections, on
par with the global average but well below the OECD average of 29%. Although
the vast majority of firms in the region use email to interact with clients and/or
suppliers, the number of firms with their own website is relatively low in many
66 Rabellotti et al.
67 Nurse.
68 IDB, 2014. “RG-T2536: Caribbean Regional Entrepreneurial Assets Commercialization Hub”.
http://www.iadb.org/en/projects/project-description-title,1303.html?id=RG-T2536
69 SEGITTUR and CICtourGUNE.
70 Rabellotti et al.
© The Economist Intelligence Unit Limited 2015
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countries (see Figure 15). Fast, reliable internet access improves the efficiency
and productivity of enterprises, according to the World Bank71.
Further, governments should target support for innovation (funding and
training) toward newly forming clusters: a targeted approach focused on specific
industries is likely to have greater impact than broader support initiatives.72
Finally, the promotion of creative thinking will fuel the innovation process73.
Doing so means confronting rote-learning systems in the education system,
command-and-control management techniques, risk-averse business practices
and excessive government bureaucracy74.
Gender
A scoping study of gender and enterprise development in the Caribbean was
carried out in 2009 by the UK Department for International Development
(DFID). The study notes that the Caribbean is characterized by low levels of
labor market participation by women. Moreover, where women do participate
in the labor market, it is mainly as employees and in low-growth, low-status
and low-paying sectors. The suggested reason for this is the high level of gender
stereotyping in the Caribbean, which has led to women being segregated
educationally and consequently also occupationally and sectorally; this is
despite the fact that women dominate tertiary education enrolment across the
region.
Figure 16
At 76% in 2013, the average labor force participation rate for men in the
Caribbean is considerably higher than that for women (55%; see Figure 16)75,
while the average unemployment rate is higher among women, at 15% in 2013,
71 World Bank, Broadband Toolkit. http://broadbandtoolkit.org/1.3
72 Rabellotti et al.
73 Nurse.
74 Ibid.
75 These averages include the 2013 labor force participation rates according to the World Bank in the Bahamas,
Barbados, Belize, the Dominican Republic, Guyana, Haiti, Jamaica, St. Lucia, St. Vincent and the Grenadines,
Suriname, and Trinidad and Tobago.
© The Economist Intelligence Unit Limited 2015
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than among men (9%)76. Outside of the hotel and restaurant industry and the
education sector, many of the employment activities in which women tend to
be involved are in small, often informal, firms. Despite the major barriers to
female participation in the labor market, the percentage of firms with women
in top management positions averages 22% in the region, slightly above the
2010 global average of 18% (see Figure 17).
Figure 17
Environment
The small island states of the Caribbean face increasing threats from climate
change and pressure on ecosystems. Many of these countries are dependent on
marine, coral reef and other natural habitats for economic activities, ranging
from tourism to agriculture and industry. Environmental pressures include
deforestation, wetland destruction, removal of sea grass and coral reef
degradation. In some countries population growth, coupled with agricultural,
industrial and commercial expansion, has resulted in intense competition for
land, leading to encroachment on and fragmentation of natural habitats.
Biodiversity is also impacted by natural processes and events, such as erosion
and hurricanes, the effects of which are often exacerbated by human activities
and practices. Climate change is likely to amplify the negative effects of these
natural events. Many countries have sought to address these challenges through
the development of policies and programs to protect their biological resources.
In addition, regional institutions and initiatives dealing with these problems
exist in the region: they include the Caribbean Community Climate Change
Centre, the Caribbean Region Climate Adaptation Partnership Initiative, the
International Union for Conservation of Nature Caribbean Initiative and the
Caribbean Risk Management Initiative.
76 Average unemployment rates by gender are calculated using International Labour Organization (ILO)
estimates for the Bahamas, Barbados, Belize, the Dominican Republic, Guyana, Haiti, Jamaica, Suriname, and
Trinidad and Tobago.
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III. Large and emerging sectors
The Private Sector Assessment Reports (PSARs) analyze existing sectors of
regional economies that contribute significantly to economic activity and
growth, as well as emerging sectors that have the potential contribute to
increased economic growth. These sectors have been identified based on their
size, importance to the local economy and growth potential.
Business-process outsourcing
and business services
The business-process outsourcing (BPO) sector is growing in a number of
Caribbean countries. These economies are ideal locations for BPO, given their
English-speaking populations, low labor costs and geographical proximity to
North America, where many clients for such services are based. Jamaica, for
example, has promoted BPO (and, more broadly, the information and
communications technology sector) as a strategic growth industry by providing
tax incentives.77 International firms have responded with investments in BPO
centers in the country, while local software-development firms have also been
established. A US$6m facility has also been constructed to provide office space
for BPO firms looking to set up operations on the island78. In addition, Compete
Caribbean has contributed a US$500,000 grant to set up a call-center incubator
in collaboration with the Jamaican national BPO industry association79.
Trinidad and Tobago hosts 3,000 BPO jobs in businesses such as Scotiabank
and RBC Royal Bank (both of Canada) and US-based Pan-American Life
Insurance80. The country is a low-cost location for BPO providers, with highly
competitive energy costs and average annual salaries in the range of
US$14,000-18,00081. In addition, the government has invested almost US$2bn
in tertiary education since 200082. Belize, too, hosts a number of BPO
companies and trades on the fact that its workforce is fluent in both English
and Spanish.
Outside the BPO sector, other business and financial services make a significant
contribution to economic activity in countries including Antigua and Barbuda,
the Bahamas, Barbados, St. Kitts and Nevis, St. Lucia, and St. Vincent and the
Grenadines. In Barbados, the business and financial services industry accounts
77 Compete Caribbean, 2014. Private Sector Assessment of Jamaica. Inter-American Development Bank (IDB).
http://competecaribbean.org/wp-content/uploads/2014/12/EIU-Jamaica-revised-final-12.4.14.pdf
78 Patterson, C., 2014. “US$6 M Invested in BPO Facility in Portmore”. Jamaica Information Service.
http://jis.gov.jm/us6-m-invested-bpo-facility-portmore/
79 McIntosh, D., 2014. “Compete Caribbean Program Gets US$500,000 Boost”. Jamaica Information Service.
http://jis.gov.jm/compete-caribbean-program-gets-us500000-boost/
80 invesTT, 2014. “Low costs, proximity to US bolster Trinidad's role in growing BPO sector”. invesTT.
http://www.investt.co.tt/blog/investt-blog/2014/may/low-costs-proximity-to-us-bolster-trinidads-role-ingrowing-bpo-sector
81 invesTT, 2014. “ECLAC report examines Caribbean FDI trends”. invesTT.
http://www.investt.co.tt/blog/investt-blog/2014/may/eclac-report-examines-caribbean-fdi-trends
82 Nearshore Americas, 2014. “Trinidad and Tobago: Diversification Leads to Cost Savings for Financial Services
Outsourcing”. Next Coast Media and Marketing Services LLC. http://www.nearshoreamericas.com/ebooktrinidad-and-tobago-rediscovered/
© The Economist Intelligence Unit Limited 2015
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for more than 60% of corporate income tax and contributes around US$450m a
year to the local economy.83
Tourism
Ecotourism is growing rapidly around the world—by some estimates, up to
three times as fast as the broader tourism industry84. In 2012 the travel and
tourism industry contributed 4.6% of GDP (US$15.7bn) and 3.9% of total
employment in the Caribbean85. The industry’s direct contribution to the
economy is much higher in some individual countries: in 2012 it stood at 48.4%
of GDP and 57.4% of employment in the Bahamas, and at 77.4% of GDP and
71.5% of jobs in Antigua and Barbuda86. Given the importance of tourism to the
regional economy, the Caribbean needs to increase its competitiveness in this
sector. The islands should develop more high-end tourism, which is more
lucrative and typically environmentally friendly. This includes ecotourism but
also cultural tourism and high-end gastro-tourism.
Ecotourism resources and attractions in the Caribbean include coastal and
marine resources in the Bahamas and St. Kitts and Nevis, as well as forest,
mountains, volcanoes and waterfalls in Trinidad and Tobago and Guyana87.
Cultural and heritage tourism attractions are also being developed and
promoted in Grenada, St. Vincent and the Grenadines, and Jamaica.
Higher education
Offshore higher education has been a significant activity in the Caribbean since
1976, when St. George’s University in Grenada was founded as an offshore
medical university88. St. George’s currently has more than 6,000 students (most
of them hailing from the US and the UK) enrolled in its undergraduate and
postgraduate degree programs. The university contributes more than US$100m
annually to the local economy89. The education sector in Grenada has grown
consistently since 2001, and in 2011 it accounted for 19% of GDP and employed
almost 8% of the labor force90.
Other countries in the region also offer offshore education services. St. Lucia
hosts six offshore medical schools, and is seeking to strengthen the sector by
establishing an accreditation council and improving infrastructure by building
and refurbishing hospitals91. In Antigua and Barbuda, the American University
of Antigua has expanded as part of the country's strategy to increase the size of
83 Compete Caribbean, 2014. Private Sector Assessment of Barbados. IDB. http://competecaribbean.org/wp-
content/uploads/2014/10/EIU-Barbados_FINAL-with-cover.pdf
84 Wilson, S., 2014. Cariforum Ecotourism Industry Value Chain Analysis. IDB.
http://competecaribbean.org/resources/private-sector-development/value-chain-analysis-ecotourismindustry/?preview=true&preview_id=3065&preview_nonce=ab4b71d841
85 Ibid.
86 Ibid.
87 Wilson.
88 Compete Caribbean, 2014. Private Sector Assessment of Grenada. IDB. http://competecaribbean.org/wp-
content/uploads/2014/10/Grenada-Final.pdf
89 Ibid.
90 Ibid.
91 Compete Caribbean, 2014. Private Sector Assessment of St. Lucia. IDB. http://competecaribbean.org/wp-
content/uploads/2014/10/EIU-St.-Lucia-FINAL-9.25.14.pdf
© The Economist Intelligence Unit Limited 2015
30
the sector92. Meanwhile, in Dominica education services have been the secondlargest economic sector in the past decade, contributing 14% of GDP on average;
this trend has been driven mainly by the expansion of the private education
subsector, which provides medical education to foreign students93.
Agriculture and food
processing
Agriculture has received renewed interest in the Caribbean recently, following
two decades of decline in large-scale, export-oriented production of commodity
crops such as sugar and bananas as the Caribbean’s preferential access to major
markets eroded. Indeed, the agricultural and food-processing sector receives the
largest proportion of investment from the region's diaspora.94A focus on highvalue niche products—such as organic vegetables, spices, coffee and specialty
grains—is essential if the sector’s decline is to continue to be reversed95.
Agriculture accounts for around 16% of employment in the Caribbean overall,
and for around 30% in Guyana, 25% in Dominica and 18% in Jamaica96.. Small
farmers in the Caribbean—around 30% of whom are women—typically work
plots of 2 ha or less97. In addition to crop cultivation, farmers may raise
livestock or practice small-scale aquaculture. According to the World Bank,
agricultural value added stood at just under 5% of regional GDP in 2012.
However, the proportion was higher in Guyana, at 21.5% of GDP, Dominica
(14.9%) and Suriname (9.3%).
In Dominica, agriculture was the fastest-growing sector of the economy in 200812.98 The contraction of the banana industry, beginning in 1992 as European
trade preferences began to be withdrawn, presented challenges, but farmers
began to market "fair trade" bananas to the EU in 2002, which lessened the
shock99. The Dominican agricultural sector has received continuous investment
and is more competitive than its regional counterparts. The government has
supported the sector by rebuilding roads and supporting irrigation projects.
Antigua and Barbuda, meanwhile, has used investment incentives to spur
agricultural development, but the country requires an electronic marketinformation system and needs to increase economic links between the
agricultural sector and rest of the domestic economy, including tourism100. In
92 Compete Caribbean, 2014. Private Sector Assessment of Antigua and Barbuda. IDB.
http://competecaribbean.org/wp-content/uploads/2014/10/EIU-Antigua-Barbuda-Final.pdf
93 Compete Caribbean, 2014. Private Sector Assessment of Dominica. IDB. http://competecaribbean.org/wp-
content/uploads/2014/10/Dominica-Private-Sector-Assessment-Report.pdf
94 UWI Consulting.
95 Tandon, N., 2014. Strengthening Sustainable Agriculture Practices in the Caribbean.
http://competecaribbean.org/resources/private-sector-development/strengthening-sustainable-agriculturecaribbean/
96 Ibid.
97 Graham, B., 2012. “Profile of Small-Scale Farming in the Caribbean”. UN Food and Agriculture Organization.
http://www.rlc.fao.org/fileadmin/templates/iniciativa/content/pdf/eventos/agric-fam-caribe-2012/profilesmall-scale-farming-in-the-caribbean.pdf
98 Compete Caribbean, 2014. Private Sector Assessment of Dominica. IDB. http://competecaribbean.org/wp-
content/uploads/2014/10/Dominica-Private-Sector-Assessment-Report.pdf
99 UN Economic Commission for Latin America and the Caribbean, undated. “Wither the agricultural sector in
the Caribbean?”. http://www.cepal.org/portofspain/noticias/bolnoticias/9/26869/issue19.pdf
100 Compete Caribbean, 2014. Private Sector Assessment of Antigua and Barbuda. IDB.
http://competecaribbean.org/wp-content/uploads/2014/10/EIU-Antigua-Barbuda-Final.pdf
© The Economist Intelligence Unit Limited 2015
31
other Caribbean economies, economic links between agriculture and tourism
need to be strengthened. This could entail supplying fresh foods to hotels and
cruise ships or offering farm tours, among other options101.
In Grenada, nutmeg production is a traditional industry. Before hurricanes
struck in 2004 and 2005, a total of 6,570 nutmeg farmers were active on the
island, but their number fell to 2,500 following the disasters102. However,
continued global demand means that the crop is still attractive for farmers. In
St. Vincent and the Grenadines more than 4,000 people work in the agricultural
sector. Many of them are organized in alliances and cooperatives103, and this
has encouraged the development of agro-processors and also of links to the
tourism sector, which is eager to purchase value-added products such as
chocolate. However, agro-processing industries across the Caribbean could
benefit from the further development of standards and improvement of testing
practices to ensure quality.
Energy and mining
Many Caribbean countries depend on imported fuel to meet their energy
needs. But some are exploring renewable-energy options in order to reduce
electricity costs (high power prices are a frequently cited concern for businesses)
and create jobs.
Barbados is a small-scale oil and gas producer, but its government is seeking to
promote the transition to alternative energy sources for electricity production.
Solar-panel and solar water-heating companies have emerged104, and additional
technologies include biomass and wind farms, so that it is estimated that
renewables could produce 30% of the country’s energy by 2029 105. In Dominica
a geothermal plant is under construction, and the country is investigating the
possibility of exporting electricity to Guadeloupe and Martinique as its
geothermal sector expands106.
Trinidad and Tobago is a case on its own, being the region’s largest oil and gas
producer. The government has welcomed foreign investment in the natural gas
sector and has promoted the production of liquefied natural gas (LNG) for
export. In addition, the country hosts industries that require large amounts of
inexpensive energy, such as the manufacture of methanol, ammonia and steel.
A nascent energy-sector service industry is developing in Trinidad, with the
ability to sell high-value-added goods and services to energy companies locally
and overseas.
101 Tandon.
102 Compete Caribbean, 2014. Private Sector Assessment of Grenada. IDB. http://competecaribbean.org/wp-
content/uploads/2014/10/Grenada-Final.pdf
103 Compete Caribbean, 2014. Private Sector Assessment of St. Vincent and the Grenadines. IDB.
http://competecaribbean.org/wp-content/uploads/2014/10/St.Vincent-the-Grenadines-FINAL.pdf
104 Compete Caribbean, 2014. Private Sector Assessment of Barbados. IDB. http://competecaribbean.org/wp-
content/uploads/2014/10/EIU-Barbados_FINAL-with-cover.pdf
105 Ibid.
106 Compete Caribbean, 2014. Private Sector Assessment of Dominica. IDB. http://competecaribbean.org/wp-
content/uploads/2014/10/Dominica-Private-Sector-Assessment-Report.pdf
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Suriname is another regional economy with a substantial extractive industry
presence, with a well-established mining sector. However, the mining sector
has few links to the rest of the economy. Gold mining companies purchase
most of the value-added goods and services that they require from foreign
suppliers. However, there is scope to expand the links between miners and
domestic firms so as to enhance the contribution of mining activities to the
wider economy107. Guyana’s experience with mining has differed from that of
Suriname; mining in Guyana is closely linked to other sectors in the economy,
and most goods and services for the sector (with the exception of large
machinery) are purchased in the domestic market108. These forward and
backward links have increased investment and spending in the local economy,
including large investments in real estate109.
107 Compete Caribbean, 2014. Private Sector Assessment of Suriname. IDB. http://competecaribbean.org/wp-
content/uploads/2014/12/2014-Suriname-Private-Sector-Assessment-Report.pdf
108 Compete Caribbean, 2014. Private Sector Assessment of Guyana. IDB. http://competecaribbean.org/wp-
content/uploads/2014/12/2014-Guyana-Private-Sector-Assessment-Report.pdf
109 Ibid.
© The Economist Intelligence Unit Limited 2015
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IV. Priority areas and action plans
The challenge for Caribbean economies is to create domestic industries that
generate jobs and boost economic growth. Instead of focusing narrowly on
individual sectors, policymakers need to examine the entire value chain related
to new economic activities and promote the creation and growth of small- and
medium-sized enterprises (SMEs), while also targeting increased productivity
and export competitiveness of local firms110. Based on the PSARs for the 15
countries included in this research, together with additional research funded by
Compete Caribbean and further secondary research, a number of policy
recommendations can be made. These include prioritizing public-private
partnerships (PPPs), promoting dialogue between the public and private sectors,
and ensuring that economies leverage human-capital resources.
Dialogue between the public
and private sectors and
prioritization of issues
The next phase of economic development in the Caribbean region needs to be
based on innovation-driven growth, in order to better weather external shocks
(including financial instability, climate change, and volatility in food and
commodity prices) and avoid the low-value-added and commodity traps111. To
achieve this, countries will have to broaden the range of stakeholders that
provide input during the development of growth-enhancing policies, sectoral
strategies and investment programs112. Stakeholder groups must include a wide
range of actors from the public and business sectors and from civil society, and
should encompass women, young people, civil-society organizations and the
Caribbean diaspora113.
Private-sector assessment exercises conducted across the region have heard calls
for collaboration and dialogue. In particular, it has been noted that a
prerequisite for such collaboration is improved organization among business
leaders, in order to enable the business sector to engage in effective dialogue
with government114. The Social Partnership model established in Barbados is
one example that has been proposed as a possible solution for other countries.
The main measures that have been called for are:
 The establishment of committees comprising representatives of government,
business and labor
 Simplification and improvement of governments' support systems for
businesses
 The development of national strategic plans that prioritize private-sector
development based on the issues identified by the committees
110 Ruprah et al.
111 Nurse.
112 Caribbean Growth Forum, undated. “Background”.
http://siteresources.worldbank.org/INTLAC/Resources/CGF_background.pdf
113 Compete Caribbean, 2013. “Caribbean Growth Forum (CGF)”.
http://www.competecaribbean.org/projects/projects-reform/caribbean-growth-forum-cgf
114 Special Studies Unit, 2013. Compete Caribbean OECS Project Private Sector Assessment and Donor Matrix
Report for Antigua and Barbuda. University of the West Indies.
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Public-private partnerships
The Caribbean region faces a pressing need for infrastructure investment to
enable the private sector to drive economic growth. Private investment is an
important means of filling the infrastructure financing gap amid fiscal
constraints governments face across the region. This approach has the benefits
of spreading the high cost of infrastructure financing amid different
stakeholders, as well as leveraging the private sector’s expertise in infrastructure
management and efficiency, gained from similar projects elsewhere. The
International Finance Corporation (the World Bank's private-sector financing
arm) has identified several steps that governments can take to facilitate PPP
projects in the region:
 Explore the harmonization of PPP legislation in the region, especially among
countries with similar legal systems
 Consider creating PPP units in countries that lack them
 Build project identification, selection, and development capacity through
national training and sharing experiences at national level
 Establish a regional PPP center of excellence115
 Identify and plan for the fiscal impact of PPPs early on
Policy tools to stimulate
private-sector development
Caribbean governments have a wide array of policy tools at their disposal as
they seek to encourage innovation and enhance productivity in the private
sector, ultimately boosting the competitiveness of their economies. Innovation
drives higher productivity, and is a key element in the creation of new
industries and jobs. Governments can support innovation directly via funding,
as well as indirectly through policy incentives. A discussion of innovation led
by the Caribbean Growth Forum in 2013 resulted in several recommendations
that are applicable across the region:
 Facilitating industry associations and networks that could lead to an increase
in partnerships and collaborations between enterprises. (Support for such
networks should also consider the knowledge networks and links that exist in
the diaspora.)
 Seeking alternative funding mechanisms for start-ups, including incubators,
crowd funding and "shepherding"
 Promoting enterprise development with a focus on innovation-driven
enterprises
 Offering entrepreneurial training in order to share new practices with
Caribbean firms in areas such as risk management and the collateralization of
intellectual property116
Ensuring the best possible environment for business is another area in which
government intervention is desirable. The aim here is to ensure the ease of
doing business and fair competition conditions.. To improve the business
environment, governments should:
115 Ibid.
116 Nurse.
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 Make all aspects of doing business easier. This includes reforms in the areas of
starting businesses, dealing with permits, employing workers, registering
property, getting credit, protecting investors, paying taxes, trading across
borders, enforcing contracts and closing businesses
 Invest in infrastructure, particularly transportation systems and information
and communications networks
 Resolve investment applications quickly and fairly
 Facilitate exports. This includes helping enterprises to obtain finance, making
available transparent customs information, providing efficient customs
procedures, and educating businesses about how to take advantage of freetrade agreements117.
Government investment in information technology infrastructure brings the
digital highway to firms nationwide. Promoting increased technology use by
SMEs can accelerate their growth and raise their success rates. Globally, small
firms that use the Internet export twice as much on average as those that do
not118. In industries such as agriculture, technology is underexploited in the
Caribbean. With the proper training and investment, farmers can use
technology to increase the efficiency of business transactions, improve
communication, market their products, reduce the costs associated with recordkeeping, check market prices and access mobile finance. In manufacturing,
better use of technology can translate into improved manufacturing techniques
that increase efficiency. Technology transfers through partnerships with foreign
firms, as well as with academia, are one means of introducing these
technologies into the private sector.
Assessments of the region's private sector have routinely highlighted the
difficulties that firms—and particularly SMEs—encounter in obtaining finance,
and World Bank statistics show that the proportion of their funds that
businesses in the Caribbean obtain from the commercial banking system is
small. Governments can implement policies to address this problem. However,
financial institutions must also make changes in order to improve access,
including the following:
 A regional development institution with a remit similar to that of the
International Finance Corporation could fill funding gaps faced by the private
sector, including farmers, manufacturers and other businesses119.
 Economies could benefit from the establishment of credit bureaux and
collateral registries at national or regional level120.
117 Ruprah et al.
118 Ibid.
119 Compete Caribbean, 2014. Private Sector Assessment of Barbados. IDB. http://competecaribbean.org/wp-
content/uploads/2014/10/EIU-Barbados_FINAL-with-cover.pdf
120 In 2014 Jamaica enacted legislation that allowed firms to use a broader range of assets as collateral and also
established a notice-based collateral registry. These changes supported a marked improvement in Jamaica’s
rankings in the annual Doing Business 2015 report.
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 Financial institutions should increase their adoption of technologies that have
the potential to increase efficiency and reduce costs, resulting in savings that
can be passed on to borrowers in the form of lower interest rates and other
charges121.
 The Eastern Caribbean Enterprise Fund is an example of a tool that can
provide equity financing as well as debt financing to promising SMEs, but
more mechanisms and incentives to make both types of financing available
are needed in the region122.
 Business people need more training in order to increase firms' formality and
to enable them to improve the collection and organization of the information
that lenders require when considering loan applications123.
The agricultural sector, in particular, requires specific actions to improve access
to finance, including increasing the affordability of loans, designing credit
products to match specific crop cycles and developing customized insurance
products for smallholders124.
Finally, building and supporting entire value chains is essential to creating
lasting economic growth in Caribbean economies. These chains will include
clusters at various economic levels that will need different types of support. In
innovative clusters, actions should target projects that will keep these clusters
on the knowledge frontier. Sluggish clusters, by contrast, will need to receive
support to enhance innovation, for example by creating networks and
increasing their access to technology125.
Talent for the 21st century
Promoting the development of the private sector requires talented staff in
public bodies to implement new policies, as well as capable managers and
workers to make businesses successful. Experts observe that, even in a sector as
well established in the Caribbean as tourism, businesses lack qualified
personnel because universities and training programs do not teach the requisite
skills. Companies face talent shortages due to candidates’ high salary
expectations and a shortage of candidates with the appropriate skills. In order
to hire the top people, firms and governments must make talent management
part of their overall strategy, ensuring that formal qualifications offered by
educational institutions are aligned with organizations’ needs. To increase the
efficiency of the Caribbean tourism sector, educational programs need to
incorporate skills development in business-management models, online
marketing and customer-relationship management126. More broadly, training
programs need to be matched with emerging economic clusters. Education in
121 Compete Caribbean, 2014. Private Sector Assessment of Antigua and Barbuda. IDB.
http://competecaribbean.org/wp-content/uploads/2014/10/EIU-Antigua-Barbuda-Final.pdf
122 Compete Caribbean, 2014. Private Sector Assessment of St. Lucia. IDB. http://competecaribbean.org/wp-
content/uploads/2014/10/EIU-St.-Lucia-FINAL-9.25.14.pdf
123 Compete Caribbean, 2014. Private Sector Assessment of Grenada. IDB. http://competecaribbean.org/wp-
content/uploads/2014/10/Grenada-Final.pdf
124 Tandon.
125 Rabellotti et al.
126 SEGITTUR and CICtourGUNE.
© The Economist Intelligence Unit Limited 2015
37
the areas of science, technology, engineering and mathematics should also be
improved.127 In agriculture, farmers need to receive training on more sustainable
methods of cultivation, including practices that will allow them to obtain
organic and other types of value-added certification.128
In terms of human capital and entrepreneurship, relevant actors within
Caribbean economies should:
 Identify and disseminate core technological and market knowledge to
entrepreneurs, and train high-level personnel who will act as trainers in local
networks
 Promote entrepreneurship via marketing and communications campaigns
 Identify the needs of specific clusters, and implement innovation and
business-training programs that improve their competitiveness
 Develop and implement a school entrepreneurship program to engender an
entrepreneurial culture from a young age
 Provide opportunities for networking with entrepreneurs in other countries,
including those within the diaspora, and invite foreign entrepreneurs to
participate in the local economy
 Create flexible higher-education programs that promote project-based,
multidisciplinary education129
 Tap into the knowledge and networks of the diaspora
Conclusion
Stimulating sustainable growth led by the private sector must be a priority in the
Caribbean. In the short term, the region will face a more difficult economic
environment, reflecting the still-challenging global economic climate and a series
of local constraints, including stretched public finances, over-reliance on the
public sector and a deficit of skilled labor. These challenges are, however,
surmountable Private-sector-oriented solutions will be essential, including
improved firm-level productivity, economic diversification, greater engagement
of diasporas, and deeper involvement with local educational institutions.
The challenge for Caribbean economies is to create domestic industries that
generate jobs and boost economic growth—and to rely less on government as a
source of employment and growth. Policymakers must examine the entire value
chain related to economic activities and promote the creation and growth of
small- and medium-sized enterprises, while also targeting improved export
competitiveness of local firms. Key to achieving these goals is prioritizing publicprivate partnerships (PPPs), promoting dialogue between the public and private
sectors, and ensuring that economies leverage human-capital resources. All of
these steps will take time; overcoming longstanding constraints will not be easy.
But governments can do much to streamline operating conditions, including
127 Ruprah et al.
128 Tandon.
129 Vicens, L. and Grullón, S., 2011. Innovation and Entrepreneurship: A Model Based on Entrepreneur
Development. IDB. http://www.competecaribbean.org/wpcontent/uploads/2013/06/Vicens_and_Grullon_final_Innovation-and-Entrepreneurship-A-Model-based-onEntrepreneur-Development-english.pdf
© The Economist Intelligence Unit Limited 2015
38
improving the business environment, providing training and networking
opportunities, investing more in infrastructure and approving investment
applications quickly. With focus and commitment, measurable progress is
possible.
© The Economist Intelligence Unit Limited 2015
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